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Simultaneous Rediffusion by Cable Television Operators in Canada and the Problems of Nonpayment of Copyright Royalties Larry Seidenberg

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Simultaneous Rediffusion by Cable Television Operators in Canada and the Problems of Nonpayment of Copyright Royalties Larry Seidenberg Penn State International Law Review Volume 5 Article 2 Number 1 Dickinson Journal of International Law 1986 Simultaneous Rediffusion by Cable Television Operators in Canada and the Problems of Nonpayment of Copyright Royalties Larry Seidenberg Follow this and additional works at: http://elibrary.law.psu.edu/psilr Part of the Comparative and Foreign Law Commons, Intellectual Property Law Commons, and the International Law Commons Recommended Citation Seidenberg, Larry (1986) "Simultaneous Rediffusion by Cable Television Operators in Canada and the Problems of Nonpayment of Copyright Royalties," Penn State International Law Review: Vol. 5: No. 1, Article 2. Available at: http://elibrary.law.psu.edu/psilr/vol5/iss1/2 This Article is brought to you for free and open access by Penn State Law eLibrary. It has been accepted for inclusion in Penn State International Law Review by an authorized administrator of Penn State Law eLibrary. For more information, please contact [email protected]. Simultaneous Rediffusion by Cable Television Operators in Canada and the Problem of Nonpayment of Copyright Royalties Larry Seidenberg* I. Introduction This Article surveys a controversial issue involving both Cana- dian and United States copyright interest groups. Simultaneous rediffusion involves the unauthorized reception and retransmission or rediffusion of copyrighted United States broadcast programming by foreign cable television systems.' The issue has important ramifica- tions for a future revision of the copyright by the Canadian Parlia- ment as indicated in the Revision of Copyright Subcommittee Re- port of October 1985, "A Charter of Rights for Creators,"2 and is useful to an examination of United States copyright principles and the international role of the United States in copyright. This author's conclusion is that compulsory license3 for simulta- * Larry Seidenberg, J.D. University of Toledo, College of Law, 1986; First Prize in the Nathan Burkan Memorial Competition in Copyright Law held at the University of Toledo College of Law, 1986; First Prize, Alexander Petrellis Perry Award, 1986, from the Centre for Canadian-United States Law at the Detroit College of Law; Presented at the 80th Annual Conference of the American Society of International Law, April I 1th 1986, Student Open Forum. I. See generally International Copyright/Communication Policies: Hearings Before the Subcommittee on Patents Trademarks of the Senate Committee on Patents Trademarks of the Senate Committee on the Judiciary. 98th Cong. Ist Sess. 123-28 (1983) (statement of Walter Josiah, Executive Vice President and General Counsel of Motion Picture Association of America). Other names by which it has been called are retransmission liability, satellite signal theft, and unauthorized secondary transmission. For studies dealing with economic fea- sibility of a rediffusion right, see SECOR, INC., "POSSIBLE COSTS OF A RETRANSMISSION RIGHT IN CANADA: AN ADAPTION OF THE AMERICAN SYSTEM TO CANADA," (Sept. 1985). 2. Fox, Culture and Communication.: Key Elements of Canada's Economic Future (Brief to the Royal Commission Authority) 13 (1983) [hereinafter Culture and Communication]. 3. Article I, § 8 of the U.S. Constitution sets forth the basic policy for copyright protec- tion in the United States. A statutory intellectual property right was created to protect the financial interests of copyright owners balanced against the interest of the public's access to works of authorship. The fear of statutorily created monopolies in fields dependent upon these copyrights prompted Congress to enact limitations on the copyright owners' powers to keep his or her works from the public. Thus, a compulsory license scheme was enacted, allowing noncopyright owners access to the copyrighted work in return for payment. 2 DICKINSON JOURNAL OF INTERNATIONAL LAW [Vol. 5:1 neous rediffusion of broadcast signals is a proper course to take in the development of a long-term copyright policy in Canada. Eco- nomic studies indicate the feasibility of a rediffusion right for copy- right owners at a minimal expense to cable television (CATV) sys- tems4 that may be absorbed as subscription levels climb. Canadian Satellite Communications (CANCOM) and future superstation de- velopment should assure increased viewership for CATV systems to make up for any early revenue declines due to increased royalty pay- ments through performing rights organizations like Composers, Au- thors and Publishers Association of Canada (CAPAC). Whether they be foreign nationals or Canadians, the rights of copyright own- ers must be balanced against the interest of established industry groups like CATV system owners and the national interest in Cana- dian cultural development. By maintaining a rediffusion right, Cana- The first compulsory license was enacted in the 1909 Copyright Act in 17 U.S.C. § I (1908). which required a person mechanically reproducing a copyrighted work to pay the owner a royalty of two cents on each part manufactured. Since that time, the 1976 Act incor- porated 13 compulsory license provisions or limitations on copyright. They can be found in 17 U.S.C. §§ 107-118 (1931), as well as 17 U.S.C. § 602 (1959). A compulsory license for secondary cable retransmissions is suggested for a future Cana- dian Copyright Law Revision to be modeled on the corresponding U.S. provision. U.S. Copy- right Act, 17 U.S.C. § III(d) "Compulsory License for Secondary Transmission by Cable Systems" [P.L. 94-553, Oct. 19, 1976]. In that very detailed section a royalty fee is paid based upon computations of the gross receipts received from subscribers. This computation utilizes a formula that employs factors such as service beyond the local area and first, second, third, and fourth distant signal equivalents. The computation is defined in the United States Copyright Act of 1976 as the value assigned to the secondary transmission of any non-network television programming earned by a cable system in whole or in part beyond the local service area of the primary transmitter of the programming. It is computed by assigning a value of one to each indepen- dent station and a value of one-quarter to each network station and noncommercial educa- tional station for the non-network programming so carried under the rules, regulations, and authorizations of the FCC. These values assigned for independent network and noncommercial educational stations are subject to certain exceptions and limitations. Copyright Act of 1976 et al.,SECOR. INC.. "PROBABLE COST OF A RETRANSMISSION RIGHT IN CANADA: AN ADAPTATION OF THE AMERICAN SYSTEM TO CANADA," (Sept. 1985). 4. CATV systems are defined in Federal Communications Commission Rule 76.151a, which states that it is a nonbroadcast facility consisting of a set of transmission parts and associated signal generation, reception, and control equipment, under common ownership and control, that distributes or is designed to distribute to subscribers the signals of one or more television broadcast stations, but such terms would not include I) any such facility that serves fewer than fifty subscribers or 2) such facility that serves or will only serve subscribers in one or more multiple dwelling units under common ownership, control, or management. Simply, a CATV system is a system of coaxial cable and assorted equipment operations from a central receiving head-end or tower by which television signals are received off the air or by other indirect delivery means for a fee to subscribers. This system may serve a number of political subdivisions although within a distinct franchised area. "A Cable TV System - Its Functions and Operation," John P. Cole, Jr., April 7, 1978, reprinted in PRACTISING LAW INSTITUTE 1978, CURRENT DEVELOPMENTS IN CATV, TV AND PAY TELEVISION (Gary L. Christensen, Chairman, Patent, Trademarks, Copyrights and Literary Property, Coursebook series). Consumers or subscribers are fed satellite programming through CATV, MDS or Multi- point Distribution Service, or STV or Subscription Television Service. MDS is an over the air service that permits a customer's microwave antenna to receive MDS signals and convert them to a viewable frequency. Id. STV uses over the air frequencies not allocated to TV broadcast service and the signals are scrambled so viewing is not possible without a decoder. Fall 19861 SIMULTANEOUS REDIFFUSION dian copyright remains true to copyright principles and law, and does not become solely a means of accomplishing immediate Cana- dian cultural objectives perhaps feasible through other means. II. Scope of the Problem/Implications Copyright law may be viewed as legal recognition of a creator's rights. This is based on the notion that a creator should benefit from the fruits of his labor. In providing such protection, creators are en- couraged to create new works; and in doing so, the national culture 5 and general store of information is enriched. The broadcast medium is an important means of disseminating not only information but mass culture in the modern age.6 This me- dium has had special importance to development of an indigenous Canadian culture due in part to the vast geographic expanse of Ca- nada in relation to its small population, as well as Canadian de- mands for the best in entertainment, education, and culture. One reason for this is the threatening engulfment by its culturally domi- nant neighbor, the United States. Canada has assertively attempted to use its law and treaty obligations toward strengthening its re- gional and world cultural position. The Broadcast Act,' Copyright Law,8 and international treaty membership9 to the Berne Union and the U.C.C. reflect this stance. In Canada, the government vests the Canadian Radio and Tele- vision Commission (CRTC) with the regulatory functions and pow- ers to implement goals of cultural independence. Specifically, Section 3 of the Broadcast Act, has as its purpose: "to guarantee a broadcast system which would be effectively owned and controlled by Canadi- ans so as to safeguard, enrich and strengthen the culture, society, ... [and] economic fabric of Canada." 10 CRTC policy calls for Canadian content mediums of thirty per- cent between six a.m.
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